Gold's Attempt To Breach $1,300 Fails Amid Positive Flash PMI Data
(Kitco News) - The gold market remained near daily lows after the release of positive preliminary manufacturing and service-sector sentiment data.
The flash U.S. manufacturing Purchasing Managers Index for May rose to a reading of 56.6 from April’s 56.5, marking a 44-month high, research firm IHS Markit said in its latest report. The latest monthly figure matched economists’ expectations.
At the same time, the firm’s service sector PMI reading jumped to 55.7 from April’s 54.6. Economists were projecting for the index to edge up to 54.9.
Any monthly reading above 50 points to an expanding sector, while anything below that shows contraction in activity.
“U.S. private sector firms signaled a robust and accelerated rise in business activity during May, which adds to evidence of a sustained growth rebound in the second quarter of 2018,” the IHS Markit report said.
Gold prices continued to trade near daily lows after the release of the PMI data, with June Comex gold futures last at $1,288.30, down 0.29% on the day.
Earlier in the session, gold prices came within about $2.00 of hitting the psychologically important $1,300.00 level and were trading modestly higher on the day.
“The gold market bulls will have to push prices back above strong chart resistance at $1,300.00, to begin to suggest the market has put in a near-term bottom,” said Kitco’s senior technical analyst Jim Wyckoff.
The report also noted that input cost inflation is now close to five-year high, which is a positive sing for gold prices.
“Input costs measured across both manufacturing and services are rising at the fastest rate for nearly five years, with the goods-producing sector seeing the steepest cost increases for seven years in recent months,” said Chris Williamson, chief business economist at IHS Markit.
Many investors see an investment in gold as a traditional hedge against inflation.
“Supplier delivery delays, a key forward-indicator of inflationary pressures, have risen to the highest seen in the 11 year survey history. Rising demand has stretched supply chains to the extent that suppliers are increasingly able to demand higher prices. At the same time, higher oil and energy prices are pushing up firms’ costs,” Williamson added.